UMC alleges state, SmartSynch conspired

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Published: December 14,2009

Tags: energy, federal agency, recession, state government, stimulus

JACKSON — A Jackson energy management company is suing the state and another Jackson-based energy management company for allegedly conspiring to award $3.75 million in federal stimulus money for “green” public building projects to a company that was allegedly not the lowest project bidder.

A hearing was held Dec. 11 in Hinds County Chancery Court. Judge William Singletary said he would take more time to review the case before deciding how to further proceed.

On Oct. 12, Utility Management Corp. (UMC) sued SmartSynch Inc., Mississippi Development Authority and state Department of Finance and Administration. Individuals named in the suit were: MDA executive director Gray Swoope; Charles R. Snowden, director of the DFA Bureau of Building, Grounds and Real Property Management; Dr. Motice Bruce, MDA Energy Division director; Dr. Betty Norman, MDA Energy Division bureau manager; and, MDA employee Mike McCollough.

Utility Management claims its July bid for the energy efficiency projects was lower than SmartSynch’s, yet MDA announced it was awarding the money to SmartSynch Aug. 20.

Utility Management also alleges MDA and DFA officials conspired to unlawfully award the money to SmartSynch, specifically that Snowden and Norman actively championed the SmartSynch bid proposal. Utility Management wants to prevent future conspiracies, said the company’s lawyer, former U.S. Attorney Brad Pigott.

In July, MDA conducted a request for proposal (RFP) process for the projects involving smart meters, advanced electrical meters that monitor and report energy usage in real-time through a two-way communication network. According to the Department of Energy (DOE), when consumers can track their energy consumption through smart meters, their usage declines as much as 15 percent. By law MDA had to accept lowest bid. SmartSynch, UMC and Cooper Electrical Controls Inc. submitted proposals.

On Oct. 15, three days after UMC filed its lawsuit, MDA announced its retraction of the award to SmartSynch.

At the hearing, Harold Pizzetta, representing the state Attorney General’s Office, said the defendants denied the allegations. Pizzetta said MDA reviewed and selected SmartSynch, yet could not reach negotiations for a contract. Thus, MDA made the announcement rejecting all bids.

Pizzetta said the case should be handled by DFA and not be heard in Hinds County Chancery Court. DFA is the state agency charged with administering and supervising state purchasing laws and practices and has a procurement review board. If UMC chose to appeal a DFA decision, the case would then go to state court, Pizzetta said.

Pizzetta said UMC’s desire to prevent SmartSynch from receiving funds is moot because MDA already withdrew its award to the company.

In response, Pigott said UMC was seeking injunctive relief for future violations in the bidding process, since there would obviously have to be another RFP. When petitioning for injunctive relief, a plaintiff is asking the court to prohibit certain activities by a defendant; the plaintiff is not suing for damages.

“We allege an on-going bid-rigging agreement between SmartSynch and two government agencies” for millions in stimulus money, Pigott said. The state essentially promised money to SmartSynch before the bid process began, he said.

Pigott said UMC could not pursue remedy through DFA because DFA was allegedly involved in the unlawful activity.

Pigott also said Pizzetta spoke about the RFP as if it were alive and dead, or withdrawn, at the same time. “If the award is dead, it can’t be litigated in an administrative process before state government… If it’s dead, it’s dead in our ability to challenge it before state agencies,” he said.

Pigott MDA withdrew the RFP award to SmartSynch three days after UMC filed its lawsuit “like roaches when the lights come on.”

It’s our claim not that the bidding process needs reform, Pigott said, but that the state needs to follow the bidding process rules. Pigott wants to do discovery. Discovery is the pre-trial phase in a lawsuit in which each party requests documents and other evidence from the other party and can compel the production of evidence.

Pizzetta argued that taking the issue to the DFA would not be a conflict of interest because Snowden is not part of the DFA branch that would be conducting an investigation.

Both the MDA and SmartSynch web sites still display Aug. 20 news releases announcing the award of stimulus funds to SmartSynch but do not display information regarding MDA’s Oct. 15 letter withdrawing the award and rejecting all proposals.

The MDA letter said the agency initially determined SmartSynch had submitted the best proposal, but “further evaluation calls into question the determination as to which proposal is the lowest and best proposal… It now appears that the total cost of this project will exceed available funding.

“Based upon the proposals that were submitted by the three above referenced companies and the subsequent negotiations with SmartSynch for the terms of a contract, MDA, as a result of ambiguities and lack of specificity as contained in the proposals, cannot determine the total cost of the three proposals or which proposal is most cost effective… MDA has determined that no contract should be issued based on the proposals.”

A protective order issued by Hinds County Chancery Court has sealed the details of SmartSynch’s proposal.

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